Crowdfunding Favors Female Entrepreneurs: Study

A study released last month found that women are outperforming men in the increasingly lucrative world of online crowdfunding.

This is especially interesting, reports The Wall Street Journal, because women are typically only able to raise half as much startup capital as men, hampering the growth of their businesses. However, on crowdfunding sites such as Kickstarter and Indiegogo, women are out-fundraising men even in traditionally male-dominated fields like gaming and technology, according to the study.

What does the study say is behind this surprising result?

Study Credits 'Activist Variant'

According to a study conducted by Jason Greenberg of NYU and Ethan Mollick of the University of Pennsylvania's Wharton School of Business, women's success at crowdfunding is likely due to a small number of women backers disproportionately supporting women-led projects in those fields in which they are traditionally under-represented.

The study calls this "an activist variant of choice homophily," which Mollick described in slightly more decipherable terms to the WSJ as "women who are activists who want to reach out and help other women." Overall, the study found that technology ventures led by women are twice as likely to meet their Kickstarter goals as tech ventures led by men.

How to Kickstart Your Business

The study's findings are bringing more attention to the world of crowdfunding, which allows anyone with an idea and an Internet connection to conceivably fund her own personal project.

But what should you know before you get started? Here are a few tips for using Kickstarter for your small business:

• Combine crowdfunding with other traditional funding options.
• Crowdfunding platforms like Kickstarter act as middle men, but won't bail you out if you get in legal trouble.
• No idea is too weird. As you've probably heard by now, an Ohio man raised tens of thousands of dollars for his "project" to make potato salad for the first time.

Whether you're a woman or a man, crowdfunding is changing the equation for raising business capital. If you're considering starting a business, learn more at FindLaw's Learn About the Law section on Starting a Business.

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Related Resources:

• Kickstarting Equal Pay: Women Out-Raise Men on Crowdfunding Sites (Time)
• Crowdsourcing Your Invention? 3 Legal Tips That Can Pay Off (FindLaw's Free Enterprise)
• What to Do When Your Kickstarter Fails (FindLaw's Free Enterprise)
• Consult with an experienced business attorney about your options (FindLaw)